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Problem 4-26B Comprehensive cycle problem: perpetual system At the beginning of Year 2. Euro Enterprises had the following balances in its accounts Cash Inventory Land

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Problem 4-26B Comprehensive cycle problem: perpetual system At the beginning of Year 2. Euro Enterprises had the following balances in its accounts Cash Inventory Land Common stock Retained earnings $16.800 4.000 2000 12.000 10.800 During Year 2. Euro Enterprises experienced the following events 1. Purchased inventory that cost $11.200 on account from Ivey Company under terms 2/10 1/30. The merchandise was delivered FOB shipping point. Freight costs of S800 were paid in cash 2. Returned $600 of the inventory that it had purchased because the inventory was damaged in tra sit. The seller agreed to pay the return freight cost. 3. Paid the amount due on its account payable to Ivey Company within the cash discount period 4. Sold inventory that had cost $8,000 for $13,500. The sale was on account under terms 2/10, n/45 5. Received merchandise returned from a customer. The merchandise had originally cost $1.200 and had been sold to the customer for $2.100 cash. The customer was paid $2,100 cash for the returned merchandise 6. Delivered goods in Event 4 FOB destination. Freight costs of $800 were paid in cash. 7. Collected the amount due on accounts receivable within the discount period. 8. Sold the land for $3,500 9. Recognized S500 of accrued interest revenue. 10. Took a physical count indicating that $6,500 of inventory was on hand at the end of the accounting period. Hint: Determine the current balance in the inventory account before calculating the amount of the inventory write down. Required a. Identify each of these events as asset source (AS), asset use (AU), asset exchange (AE), or claimsex change (CE). Also explain how each event affects the financial statements by placing a for increase - for decrease of NA for not affected under each of the components in the following horizontal state ments model. Assume that the perpetual inventory method is used. When an event has more than one part, use letters to distinguish the effects of each part. The first event is recorded as an example. Event No. Event Type Assets + +- 1a - - - + + AS SIR Equity NA NA Liab. + NA Rew. N A NA - - - Exp NA NA - - - Net Inc. NA NA -04 b. Record the events in general journal format c. Open ledger T-accounts and post the beginning balances and the events to the accounts. d. Prepare a multistepincome statement statement of changes in stockholders' equity, balance sheet. and statement of cash flows. e. Use a single general journal to close all revenue, gain, and expense accounts to the retained earn ings account. Post the journal entry to the lediger accounts and prepare a post-closing trial balance

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